Labor Squeeze Increases Costs for Telemarketers

One surprising result of this strong economy is low unemployment. Hovering around 4.5 percent, it has created real competition for quality workers, particularly in the service sector at the low end of the pay scale.

While that's good for workers, it's affecting the companies using teleservices as a marketing strategy. Whether companies maintain an inhouse operation or partner with an outsourcer, they face a future of increased cost with rising salaries and an increasingly scarce labor pool. Anecdotal reports indicate that it's harder to find and keep workers in large quantity at the traditional low pay and benefit rates that have fueled the dramatic expansion of the industry in the last few years.

"Call centers have traditionally drawn from the marginally employed," said call center expert Madeline Bodin. "They like housewives, students with flexible schedules, those who have to work part time, recent graduates. With unemployment so low, people have other choices." Given the choice between a job in a call center and something else, they will choose the something else.

Kevin Leonard of Strategic Outsourcing Corp. specializes in hiring hundreds of agents at a time for large call centers in the southwest. "What most call center people do is call temp agencies," he said. When you staff by the hundreds in a single concentrated area, especially under time pressure, the call center management ends up under the gun, with no real opportunity to check the skills of the labor pool.

Despite the tightness of the labor market, there are opportunities to hire large numbers of teleservices representatives, said Leonard. It just can't be done the way call centers are used to doing it.

If a company wants to do it right it has to pay for quality, and pay upfront with an intelligent candidate-generation program. "The way we do it is to look at the cost justifications in the turnover," he said. In other words, if you are losing 70 percent of the staff in the first month of operation (and all the dollars that went into hiring and training those people), it is better to stretch out the timeline, do it right, and pay for better people who are likely to stick around longer. Problems with staffing, he said, are due less to a tight labor marketing than an unwillingness to staff properly.

So what should a company do to make sure that it stays insulated from changes in the local or national labor markets? First, plan well in advance of the operating start date. Work backwards from when you want the center to open and plan a serious effort to generate qualified candidates, taking into account training times, skills checking, and the cost of having to replace these people if you create a high turnover environment.

Kevin Leonard suggests staggering the start times. Instead of starting 600 reps at one time, start 200 here, 150 there, and strategically manage the process so that everybody is in their seats on the required date. He recommends developing a timeline that extends through hiring events (like job fairs and interviewing sessions), estimating how many candidates come through each event and planning accordingly.

He also recommends departure from traditional HR methods of hiring, particularly reliance on temp agencies, which tend to promote the lowest skilled reps.

Despite the competition for call center people, it is important to look for people with a high skills base. "We're looking for people with high school, college degree if you can get it, customer service experience absolutely, call center experience if they have it," said Leonard.

"The image is a difficult selling point in the applicant's mind," said Jeffrey Milberg, executive vice president of outbound teleservices firm Telemarketing Concepts. The result is that many jobs are available in a fast-growing industry.

The goal is to present these jobs to people in a different light -- as jobs that provide critical workplace skills like communication, computers, even management -- and that can be a stepping stone, even a career path. Milberg said that his reps go on within the company to positions in quality assurance, account management, fulfillment, the database department, even call center management.

The company, he said, provides all the 'good things' the worker is looking for. "When you have to calculate what it costs to hire, it makes more sense to pay them and make them stay."

In the long run, that's what it's going to take for teleservices companies to attract and keep the best people. Many centers have already broken away from the old model of hiring warm bodies to man the phones.

The call center is becoming both more complicated and more critical to the health of a company -- managers need to hire accordingly, playing to their strengths and minimizing the disadvantages of working there.

"Call centers have always had strengths, things they can offer besides money," Madeline Bodin said, citing the flexibility they offer to mothers with small children who need flexible hours as one example. "Siting your center in a place with a healthy economy is in the long term a good idea. The big picture is that a rising tide lifts all boats," she said.